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A stunning report<\/a> from City Journal alleges that while California collects some of the nation\u2019s highest taxes to fuel a $300 billion annual budget, a mounting body of evidence suggests that systematic fraud has siphoned off at least\u00a0$180 billion\u00a0during Governor Gavin Newsom\u2019s tenure.<\/p>\n From the collapse of the unemployment system to \u201cghost\u201d healthcare providers and embezzled homelessness funds, public records paint a picture of a state government that has allegedly frequently suspended basic oversight, creating a vacuum filled by international crime rings and opportunistic scammers.<\/p>\n The most documented alleged failure occurred within the Employment Development Department (EDD) during the pandemic. According to fraud specialist Haywood Talcove and subsequent state admissions, the Newsom administration \u201csuspended all of the rules\u201d for eligibility to expedite payments.<\/p>\n The state officially admitted<\/a> to paying out\u00a0$20 billion\u00a0in fraudulent claims, though independent experts like Talcove place the figure at\u00a0$32.6 billion. State records confirmed the EDD paid out hundreds of millions in claims to active prisoners, including\u00a0133 inmates on death row. Memphis rapper \u201cNuke Bizzle\u201d pleaded guilty to federal charges after recording a music video bragging about exploiting the EDD; he successfully obtained $700,000 using stolen identities.<\/p>\n California\u2019s Medicaid program (Medi-Cal) has seen its budget double to nearly $197 billion under Newsom. However, the\u00a0California State Auditor\u00a0has designated \u201cMedi-Cal Eligibility\u201d as a \u201chigh-risk\u201d issue every year since 2007, noting \u201celigibility discrepancies\u201d that the state has failed to fix.<\/p>\n In 2025, the DOJ announced charges against three individuals for using Monte Vista Pharmacy to process fraudulent prescriptions by exploiting loosened pandemic-era restrictions. Sources at the U.S. Department of Health and Human Services estimate a\u00a025% fraud rate in Medi-Cal since 2019. Using a more conservative 15% rate, experts calculate a loss of\u00a0$146 billion\u00a0on Newsom\u2019s watch.<\/p>\n \u201cMeantime, in Sacramento, state legislators have begun sounding the alarm,\u201d City Journal writes. \u201cIn February, Leticia Castillo, a Republican in the California State Assembly, proposed a\u00a0<\/span>bill<\/a>\u00a0<\/span>that would create a Medi-Cal \u2018fraud assessment task force\u2019 to \u2018review current fraud prevention tools\u2019 and \u2018evaluate how best practices from the federal government and other states could be applied in California.\u2019 To date, Newsom has not supported the bill publicly.\u201d<\/p>\n<\/div>\n The In-Home Supportive Services (IHSS) program, which pays family members to care for the elderly, lacks basic oversight like unannounced home visits. Recent federal prosecutions have targeted caregivers who claimed hours for recipients who were actually incarcerated or deceased.<\/p>\n Despite spending\u00a0$24 billion\u00a0on homelessness in five years, California\u2019s state auditor reported in 2024 that the government lacked sufficient data to even assess if the programs were working.<\/p>\n Cody Holmes, CFO of a state-funded developer, was charged with embezzling\u00a0$2.2 million\u00a0in homelessness funds to pay for exotic cars and a 6,500-square-foot mansion.<\/p>\n In 2024 and 2025, federal authorities charged over 50 individuals\u2014many with alleged ties to Romanian organized crime\u2014for using \u201cskimming\u201d devices to steal millions from the state\u2019s Electronic Benefit Transfer (EBT) system.<\/p>\n In November 2025, Newsom\u2019s former chief of staff, Dana Williamson, was charged with fraud for allegedly siphoning campaign and COVID-19 recovery funds. While Williamson has pleaded not guilty, two other well-connected aides struck plea deals.<\/p>\n<\/div>\n